Five weeks ago, Torrance, Calif., Mayor Frank Scotto was celebrating the opening of the city's new athletic fields with officials of Toyota Motor Corp. The city's biggest employer and a prime benefactor had given a half-million dollars toward the project.

This week, Mr. Scotto has had a less pleasant duty to perform: Figuring out how Torrance can fill the 101-acre hole the giant auto maker will leave behind when it vacates its...